NSAC's Blog

March 10, 2014, Washington, DC – Secretary of Agriculture Tom Vilsack today announced several initiatives to assist small and mid-scale farms and local and regional agriculture. Among the highlights were two initiatives — changes to the Farm Storage Facility Loan program and the creation of Whole Farm Diversified Risk Management revenue insurance — that the National Sustainable Agriculture Coalition played a major role in getting off the ground.

Farm Storage Facility Loans Expanded to Assist Farmers in Meeting the Growing Demand for Local and Regional Food

For fruit and vegetable growers, especially small and mid-scale family farmers, packing and storage sheds are critical pieces of their farm operations: this is where fresh produce is washed, sorted, graded, labeled, boxed up, and stored before it heads to market.

The changes to the Farm Storage Facility Loan (FSFL) program announced today recognize this important reality. Effective today, the changes to this program will provide the flexibility necessary to allow diversified fruit and vegetable producers to qualify for the loans, and will extend to cover packing and washing sheds as well as product storage.

“We applaud the Secretary and the Farm Service Agency for moving ahead with several changes to the Farm Storage Facility Loan Program that will greatly improve the program’s ability to support diversified producers that sell their produce through localized market channels, such as farmers markets, community supported agriculture (CSAs), and farm-to-institution,” said Ferd Hoefner, NSAC’s Policy Director.

The National Sustainable Agriculture Coalition worked closely with the National Young Farmers Coalition and USDA’s Farm Service Agency to help create the new options.

Farm Storage Facility Loans are financed through the Farm Service Agency (FSA) and provide low interest loans to qualified producers to build or upgrade on-farm storage and handling facilities. Traditionally, these loans have primarily provided financing for commodity grain growers’ storage bins and single-vegetable storage, such as potato storage.

To better assist in financing packing and storage facilities for fruits and vegetables, USDA has issued a directive instructing FSA employees to waive acreage reporting and crop insurance requirements for highly diversified operations and CSAs. In particular, the following special provisions now apply when fruit and vegetables producers who grow three or more crops are applying for a storage facility loan:

(1) Instead of providing the typically required three-year acreage yield reports, producers can provide information on sales, volume sold (based on farmers market space or vehicle size), CSA shares, or other similar measures.

(2) The FSFL requirement to first obtain crop insurance or non-insurance crop disaster assistance program (NAP) coverage can be waived on a case-by-case basis, taking into account a variety of factors that result in the determination that crop insurance or NAP would not provide meaningful risk protection for the producer. These factors may include, but are not limited to, the application burden, number of crops, typical area planted to each crop, and whether the producer markets his or her product in a way that commands a premium above traditional wholesale market prices (e.g. direct-to-consumer, certified organic, etc.).

(3) Because specialty crops are often processed before being placed in cold storage to maintain quality, the loans can also go toward packing sheds and certain handling equipment, such as packaging, cold dip tanks, sorting and grading bins and tables, washers, and waxers, among others.

“Today’s announcement simultaneously and proactively addresses the needs of local and regional food systems, small and mid-sized farms, and new and beginning farmers, with flexibility for new food safety requirements once they are finalized by the Food and Drug Administration,” said Hoefner. “It is an excellent step forward to serve the needs of local and regional market farmers, and a great example of how to revise long-standing programs to meet new and emerging needs.”

The directive is also accompanied by changes to the program that will make it easier and less expensive for small producers and beginning farmers to qualify for a storage facility loan. Previously, any loan over $50,000 required the producer to provide additional security, such as a lien on the property where the facility would be located. Moreover, the value of the property had to at least equal the amount of the loan and the producer had to provide either a severance agreement from any prior lien-holders or other ways to secure the loan, such as a larger down payment.

For many small and beginning farmers, these requirements discouraged applications because of the time and money required to obtain a relatively small loan. Under the new rule, the requirement for additional security does not apply unless the loan (or aggregate outstanding storage facility loans) exceeds $100,000. These changes, in addition to the changes for diversified growers, should make it easier for beginning farmers to access lines of credit.

The new 2014 Farm Bill authorizes USDA to develop a Whole Farm Diversified Risk Management Insurance (Whole Farm revenue insurance for short) for highly diversified farms. This product will be available nationwide and include a strong diversification bonus. The farm bill also contains an important provision allowing RMA to include coverage for the value of certain on-farm activities necessary to make a crop ready for market.

“NSAC has long championed the need for risk management products that are appropriate for highly diversified farms,” noted Hoefner. “Good crop and revenue insurance policies exist for agricultural monocultures, but not diversified operations, which keeps diversified growers uninsured and at a competitive disadvantage. It is our ardent hope that this emerging product will close that gap and begin to recognize the very considerable risk management benefits of crop and enterprise diversification.”

Originally introduced as part of the Local Food, Farms, and Jobs Act, Whole Farm revenue insurance aims to meet this critical need by providing nationally available revenue insurance for diversified operations such as, but not be limited to, specialty crops farms, mixed grain/livestock or dairy operations, and both organic and conventional farms.

Just as the new Farm Storage Facility Loan program recognizes the importance of post-production processing activities, the new Whole Farm revenue insurance product will include in determining revenue expenses such as the incidental processing activities that occur soon after harvest, including packing, packaging, washing, sorting, and other such activities, that are essential to producing a marketable crop.

“We congratulate USDA’s Risk Management Agency for moving full-steam ahead with Whole Farm revenue insurance,’ said Hoefner. “NSAC has a team of farmers and advocates that has been providing comments and suggestions to RMA as the implementation process unfolds, and we will continue to track progress and work to ensure the new product gets wide attention and expands to nationwide coverage as early as possible.”

Additional Initiatives

USDA also announced that it is also taking other important steps to promote local and regional food systems and food safety trainings, issues of great importance to NSAC members. These initiatives include increasing investments in Farm to School coordinators; expanding data collection on local food prices and volume through Market News; including CSAs, on-farm stores, and food hubs in the National Farmers Market Directory; and a new partnership project in five states to provide food safety trainings for Good Agricultural Practices (GAPs) certification.